Lotte Energy Materials Corp., one of South Korea’s leading battery materials makers, plans to build a copper foil plant in the US to meet growing demand for battery components from Tesla Inc. and other electric vehicle makers in North America.
Lotte, formerly Iljin Materials Co., last week filed an application with the Delaware state government to establish its US subsidiary, industry sources said on Sunday.
The application review usually takes two weeks and Lotte is set to start the process of building the copper foil plant as soon as it gains approval, sources said.
The company is considering Michigan, Kentucky, Tennessee and Georgia, where US and Korean EV makers operate, as potential locations for the factory site, they said.
Lotte is already in talks with several US state governments to discuss tax benefits for the construction of the battery material plant, sources said.
If all goes to plan, Lotte aims to pick a location for the factory by the end of this year and break ground early next year. Initial investments in the new plant will likely be between 700 billion won and 800 billion won ($526 million-$601 million), they said.
DEAL WITH TESLA
Lotte’s plan to build a copper foil plant in the US is a response to the US Inflation Reduction Act, which favors EV and battery makers operating in North America.
A Lotte official earlier said its clients have been requesting the Korean company to build a plant in the US for closer business cooperation there.
Industry officials said Lotte recently signed a long-term contract with Tesla to supply copper foil to the US EV maker.
A copper foil, also known as electfoil, is a thin foil that surrounds the anode, the negative end of a lithium-ion battery. High-strength copper foils are essential to making safer, high-density rechargeable batteries.
A thin copper foil less than 10 micrometers thick made through electrolysis of a copper sulfate solution, electfoil is also used to make cathode collectors in rechargeable lithium batteries.
It is widely used in EVs and energy storage systems. The growth of the EV market is generating robust growth in the elecfoil market.
According to market tracker SNE Research, the US high-end copper foil market is forecast to grow from 10,000 tons in 2022 to 100,000 tons by 2026 and 340,000 tons by 2030.
BUILDING GLOBAL SUPPLY CHAIN
Lotte currently runs factories in two locations globally: one in Korea with an annual production capacity of 20,000 tons and the other in Malaysia with a capacity of 40,000 tons.
The company, the world’s fourth-largest copper foil maker, is aggressively expanding its production capacity with a plan to raise its Malaysian factory capacity to 60,000 tons annually and build a 30,000-ton plant in Spain with a 560 billion won investment.
Its crosstown rival and the world’s largest copper foil maker SK Nexilis Co. is also actively expanding its facilities in Malaysia and Poland.
The overall copper foil market is expected to rise to 750,000 tons by 2025, according to an industry estimate.
Lotte Energy’s clients include China’s BYD, Korea’s LG Energy Solution Ltd. and Samsung SDI Co.
TO FOCUS ON HIGH-END PRODUCTS
Lotte’s first US copper foil plant is expected to have an initial production capacity of 30,000 tons, similar to that of its factory in Spain, and later expand it in line with demand, sources said.
The US plant is expected to focus on 6-micrometer products, more expensive and thus more profitable, they said.
Lotte said last September it developed a new ultra-high tensile elecfoil, which can significantly improve the mileage, power and stability of EVs.
Lotte Chief Executive Kim Yeon-seop said in July the company plans to expand its annual high-end copper foil production capacity to 240,000 tons by 2028 from the current 60,000 tons.
At a press conference, the CEO said Lotte aims to grab 30% of the global copper foil market within the next five years by posting annual sales growth of 20% until then.
Lotte Chemical Corp., a unit of Lotte Group, bought a controlling stake in Iljin Materials for 2.7 trillion won in 2022 and renamed it Lotte Energy Materials.
“The US market is critical to our global expansion plan,” said Lotte Energy CEO Kim in July.
